Warren Chant, a director of a research firm that focuses on superannuation, doubts whether any superannuation fund can achieve a 66 basis point cost per member as targeted in the Cooper Review of superannuation.
“We can’t see these funds getting close to 66 basis points,” says Chant. “The average default fund is 115 basis points, 75 basis points for investment and 40 basis points for administration, on an account balance of $25,000.”
Chant says the Cooper Review concentrated on costs. It decided a $20 billion fund with 8000 members who have an average account balance of $25,000 would have a net cost per member of 66 basis points, he says.
“Cooper says the benefits of ‘Super Stream’ will lower costs 7 basis points to 59 basis points,” says Chant.
“But Australian Super has an average cost of about 100 basis points per member,” he says. “The top 30 industry funds have an average cost of 115 basis points per member. The question is, how are we going to get from 115 basis points to 59 basis points? It’s like trying to fit a soccer ball into a golf putting cup.”